The narrative of health care reform has a long history in the United States dating back to the 19th century with the Bill for the Benefit of the Indigent Insane (one of the earliest federal health care proposals), which would have established asylums for the indigent, insane, blind and deaf. The bill passed both houses of the U.S. Congress, but was vetoed by President Franklin Pierce, who believed social welfare was the responsibility of the states and not the federal government.
It was during the Great Depression, when an increasing number of the population became unable to afford medical services, that the possibility of a national health insurance program to cover every American became part of the public discourse. In 1933 President Franklin D. Roosevelt wanted to include legislation for publicly funded health care programs to his pending Social Security legislation. However, the American Medical Association (AMA), as well as state and local affiliates of the AMA, attacked these provisions as “compulsory health insurance.” Roosevelt eventually removed the health care provisions from the Social Security bill in 1935. Fear of organized medicine’s opposition to universal health care became standard for decades after the 1930s.
In November 1945 President Harry Truman called on Congress to initiate a ten-year plan to transform the existing American health care system into one where coverage would be compulsory for all people. Once again the AMA warned that such “socialized medicine” would be detrimental to Americans’ health care and the plan ultimately stalled in Congress.
With the outbreak of the Korean War in June 1950, the Truman administration and Congress were forced to turn their attention away from the health care debate. However, the simple fee-for-service relationship whereby patients paid doctors out-of-pocket was being replaced by private health insurance coverage. By 1951, some 77 million U.S. residents had purchased some type of voluntary accident or sickness insurance.
In 1965 with the continuing problem of the uninsured, especially among the elderly, President Lyndon Johnson passed legislation creating both the Medicare (for the elderly population) and Medicaid (for the low-income population) programs. The legislation was not without opposition. The conflict centered mainly on the grounds that it was compulsory, it represented socialized medicine, it would reduce the quality of care, and it was “un-American”, the same arguments used in warning against the Affordable Care Act. Indeed in 1961 Ronald Reagan warned people against the passage of Medicare by warning Americans that it represented a “loss of our freedom.” Refer to Health Programs, Medicare, Overview for a comprehensive history of Medicare and Health Programs, Medicaid, Overview for a history of the Medicaid program.
In 1971 President Richard Nixon backed a proposal requiring employers to provide a minimum level of health insurance for their workers while also maintaining competition among private insurance companies. By contrast, Senator Ted Kennedy championed the Health Security Act, a universal single-payer health reform plan directed and financed entirely by the federal government. This marked the start of a career-long effort by Kennedy to overhaul the country’s health care system. Ultimately, neither proposal was passed.
When Jimmy Carter was elected President in 1976, he promptly called for “a comprehensive national health insurance system with universal and mandatory coverage.” But when the nation fell into a deep recession soon after Carter took office, health care was relegated to the “back burner” of Congressional concerns.
In 1986 Congress passed the Emergency Medical Treatment and Active Labor Act, which required hospitals to screen and stabilize all emergency-room patients. It also proposed the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, which allows employees to pay for coverage through their former employer’s group health plan for up to 36 months after losing their jobs.
In 1993 President Bill Clinton launched an effort to provide universal health care coverage based on the idea of “managed competition,” where private insurers would compete in a tightly regulated market. The plan called for everyone to carry health insurance and to contribute to its cost, though government subsidies would be made available for the poor. Moreover, the plan required employers to pay 80% of all policy premium costs for workers and their families. People who were already covered by existing government programs, such as Medicare, Medicaid, Veteran’s health benefits, Indian Health Service, etc. would simply continue to use those programs. Ultimately, the plan failed to pass through the U.S. Congress.
However, in 1997 President Clinton signed legislation creating the State Children’s Health Insurance Program (SCHIP), an initiative designed to provide federal matching funds to states for health insurance covering children whose family incomes were modest but still too high to qualify for Medicaid. Refer to Health Programs, Child Health Plus, Overview for a history of this benefit.
In December 2003, President George W. Bush signed the Medicare Modernization Act, which expanded Medicare to include prescription drug coverage. Refer to Health Programs, Medicare Part D, Overview for a comprehensive history of this benefit.
On March 23, 2010, in the most significant regulatory overhaul of the country’s health care system since the passage of Medicare and Medicaid, President Obama signed the Patient Protection and Affordable Care Act; on March 30, 2010 he signed the Health Care and Education Reconciliation Act of 2010, collectively referred to as the Affordable Care Act (ACA) of 2010. Key provisions of the law include the creation of an exchange or marketplace where individuals shop and enroll in qualified health plans on the Internet, the expansion of Medicaid allowing more low-income household to qualify for Medicaid, and federal subsidies for moderate income households to assist with plan premiums and cost sharing expenses.
However, in opposition to the ACA, 28 states filed joint or individual lawsuits to repeal the law. On June 28, 2012, in a 5-4 decision, the U.S. Supreme Court upheld the constitutionality of the ACA, particularly its core provision, the individual mandate. In addition, the Court gave the states the option to expand their Medicaid program or not.
Open enrollment for health coverage began on October 1, 2013, for coverage beginning in January 2014.
During 2017 President Trump and the U.S. Congress attempted several times to repeal and replace the Affordable Care Act but were unable to do so. President Trump’s administration, however, was able to weaken some aspects of the ACA through rulemaking. In October 2017 the Administration ended the cost-sharing reduction (CSR) payments to insurers, although insurance companies are still required to offer the cost sharing benefit to low-income customers. The Trump administration also reduced funding for the Navigator program, which conducts outreach and assists individuals with purchasing/renewing health insurance through the Marketplace, as well as shortening the annual open enrollment period on the federal Marketplace to six weeks, which was previously three months. However, states with a state-based marketplace can extend their annual enrollment period. Since NYS has a state-based marketplace its open enrollment period runs from November 1st to January 31st of the following year.
Despite the elimination of federal funding for the CSR most insurers opted to remain in the Marketplace and offset their losses by increasing the costs of premiums for silver plans, known as ‘silver loading.’ Since the premium tax credit is based on the cost of the silver benchmark plan, by raising the cost of the silver plans insurers were able to recoup their losses and were able to continue to fund the CSR, and consumers acquired a higher subsidy from the premium tax credit. So, in a round-about way, the federal government continues to fund the CSR.
In addition, CMS published a final ACA rule in June 2018 that modified some aspects of the ACA, including changes that provide flexibility to States in defining the categories of the essential health benefits required under the ACA, enhance the role of States regarding certification requirements for qualified health plans (QHPs), and provide States with additional flexibility in the operation and establishment of the Marketplace, and more. To view the final rule visit: https://www.federalregister.gov/documents/2018/04/17/2018-07355/patient-protection-and-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2019.
Most significantly President Trump was successful in repealing the tax penalty associated with the ACA’s individual mandate as part of the tax overhaul legislation (the Tax Cuts and Jobs Act) he signed into law on December 22, 2017. This effectively repealed the mandate, but it did NOT repeal the ACA. Even after the repeal of the penalty went into effect, the individual insurance markets, federal subsidies for moderate income families, and Medicaid expansion are still in effect barring further Congressional action. The elimination of the penalty means beginning in 2019 uninsured individuals who do not purchase a plan will no longer face a penalty for not having insurance. Without the penalty, it is anticipated that some people, primarily healthier individuals, will choose not to purchase coverage, potentially driving up premiums for those who remain in the marketplaces.
The ACA’s individual mandate was a requirement that most citizens and legal residents of the United States have health insurance. People who did not have health insurance, or who were not exempt from the requirement were required to pay a tax penalty. This provision of the law is no longer in effect.
On December 14th, 2018 a Federal District Court in Fort Worth, Texas declared the entire Affordable Care Act unconstitutional. This ruling, if implemented would not only eliminate the individual mandate, but would also eliminate the protections for people with preexisting conditions, the subsidies that help people purchase health insurance, the coverage of individuals up to age 26 under their parents’ plan, the entire Medicaid expansion, as well as a host of other ACA provisions.
The basis of the decision was grounded in the U.S. Supreme Court’s decision to uphold the ACA’s individual mandate in 2012, which was based on Congress’s power to levy taxes. The U.S. Congress, in the Supreme Court ruling, could legally impose a tax penalty on people who do not have health insurance. However, the Tax Cuts and Jobs Act of 2017, eliminated the tax penalty for failure to have health insurance. Thus, the Federal District Court argued that the:
1. ACA’s ‘individual mandate’ requiring most Americans to purchase health insurance or pay a penalty became unconstitutional after Congress reduced the penalty to zero dollars as part of the Tax Cuts and Jobs Act;
2. And if the mandate is unconstitutional, the entire law must fall as the rest of the law could not be severed from the individual mandate. That is, the other provisions of the ACA could not survive because they were inseparably linked to the individual mandate.
A coalition of states, led by California, challenged the Federal District Court ruling with an appeal to the U.S. Court of Appeals for the Fifth Circuit in New Orleans, which subsequently stayed the implementation of the lower Court’s decision.
On December 18, 2019 in a two-to-one decision, the panel of the U.S. Court of Appeals for the Fifth Circuit in New Orleans ruled that Congressional action did render the Affordable Care Act’s individual mandate unconstitutional, but decided to kick the case back to the Federal District Court in Fort Worth to take a more thorough look at the mandate’s severability from the rest of the law.
However, on March 2, 2019, before the district court could carry out the appellate court’s directive, the Supreme Court announced it would hear the case in its term beginning in the fall of 2020, blocking the lower courts from taking further action.
Beginning November 10, 2020, the U.S. Supreme Court began to hear arguments on whether the Affordable Care Act is constitutional, in whole or in part. The court is expected to rule on the matter before its term ends in June 2021.
In the meantime, current coverage and enrollment provision of the ACA remains intact.
WHO ADMINISTERS THE PROGRAM
Responsibility for implementing the ACA provisions, administering new and revised programs, and overseeing ACA funding rests with the U.S. Department of Health and Human Services (HHS).
The Office of Inspector General (OIG) provides technical assistance on identifying risks and preventing fraud, waste, and abuse.
The IRS administers the tax provisions included in the law, including the right to levy a penalty against businesses that do not provide insurance to employees, (which remains intact as of 2019). While the IRS will levy taxes against uninsured individuals for the 2018 tax year, they will no longer do so for the 2019 tax year and beyond.
Each State retains discretion in the establishment and operation of their Health Insurance Marketplace, the online marketplace where individuals will be able to view health plan options and purchase qualified health plans. However, many states have elected not to create their own marketplace and instead rely on the federal marketplace, https://www.healthcare.gov. In New York, the NYS Department of Health created its own marketplace called the New York State of Health Marketplace, https://nystateofhealth.ny.gov
Funding for the ACA comes from the federal government. The amount of ACA funding available in any year depends on several factors, including, but not limited to changes to the law and decisions by Congress regarding appropriations of funding.
Summary of the Affordable Care Act
Core provisions of the ACA include the expansion of the Medicaid program (Medicaid expansion allows a greater number of low-income households access Medicaid), federal assistance for the creation of insurance affordability products – the premium tax credit and the cost sharing reduction subsidy that offsets the cost of medical insurance for moderate income households who do not qualify for Medicaid, and significant nationwide consumer protections in the commercial health insurance market. The penalty associated with the individual mandate, whereby uninsured individuals must purchase health insurance or face a penalty, has been reduced to $0 beginning in 2019, thereby effectively removing the individual mandate
Another key component was the creation of health insurance exchanges or marketplaces whereby consumers shop online for qualified health plans. An individual/family is eligible to enroll in a qualified health plan if s/he is a citizen or an individual lawfully present in the U.S., is not incarcerated, is a resident of the state in which the Marketplace is operating, and is not eligible for Medicaid, Medicare, Child Health Plus or an employer based health insurance.
During the annual enrollment period people are eligible to sign up for a health plan; or switch to another health plan. After the open enrollment period ends individuals will typically not be eligible to enroll in a plan unless they meet certain circumstances, which allows them to enroll in a health plan or change plans on the Marketplace. These are known as ‘special enrollment periods.’
Under the ACA small businesses with up to 50 full-time equivalent employees can shop online to purchase qualified health plans (ACA compliant plans) for their employees. A provision in the ACA expanded the definition to 100 full-time employees beginning January 1, 2016; however subsequent legislation defined that this expansion is at state option. NYS expanded the definition to 100 employees.
While the Affordable Care Act also impacts employers, both large and small, this chapter focuses on provisions for the individual and family, not for employers.
Health Products/Programs for Low-Income Households
THE PREMIUM TAX CREDIT
The premium tax credit is a federal subsidy for low and moderate-income households that reduces the amount of the premium an individual or family pays for health insurance by providing a tax credit to offset the plan’s premium. To qualify the individual/family must purchase a qualified health plan through the state’s health insurance marketplace, not be eligible for public health coverage, that is, Medicaid, Child Health Plus, Medicare, not have access to health insurance through an employer, be a U.S. citizen or lawfully present individual, and have an annual income up to 400% of the federal poverty level (FPL). Consumers can choose to receive the credit in advance or wait until they file their taxes and receive it as a refund. See below, The Premium Tax Credit for additional information.
THE COST SHARING REDUCTION
The cost sharing reduction is a federal subsidy for low and moderate-income households that reduce the amount of out-of-pocket expenses, including deductibles, co-payments and co-insurance. In order to qualify for this subsidy, the household must purchase a silver level health plan through the state’s health insurance marketplace, not be eligible for public health coverage, that is, Medicaid, Child Health Plus, the Essential Plan or Medicare, be a U.S. citizen or lawfully present individual, and have an annual income between 200 and 250% of the federal poverty level (FPL). Once enrolled, the eligible individual/family will automatically have reduced out-of-pocket expenses (co-payments, co-insurance and deductibles). See below, The Cost Sharing Reduction, for additional information.
THE ESSENTIAL PLAN
The Affordable Care Act gives the states the option of creating a Basic Health Program, a health benefit for low-income residents. To qualify household income should be between 139% and 200% of the federal poverty level; be ineligible for public health programs, that is, Medicaid, Child Health Plus, Medicare; not have access to health insurance through an employer; be between the ages of 19 and 64; and not be incarcerated. Households enroll in a plan on the NY State of Health Marketplace. See below, Plans on the Marketplace & Who Qualifies, The Essential Plan for additional information.